The inside story of Tesco’s strike action

Tesco’s distribution centres were humming this week. Lorries packed with turkeys, parsnips and other festive foods unloaded their wares. Workers busied themselves preparing it for stores. With less than a fortnight to go, the countdown to Christmas is well and truly on.

But for Britain’s biggest supermarket, a dark shadow looms over the festivities. Workers at 13 of Tesco’s 22 distribution centres voted this week to strike in rolling periods from 16 December in a dispute over pay.

Around 1,200 Tesco employees represented by Unite and over 5,000 by Usdaw rejected the supermarket’s 4% pay rise as they pressed for a figure closer to the latest retail price inflation of 6%.

If the strikes take place, it will mean substantial disruption during one of Tesco’s busiest weeks of the year. And Tesco is not alone. HGV drivers at Carntyne Transport – whose customers include drinks giant Diageo – are also currently voting on strike action, a now regular occurrence among haulage and logistics workers up and down the country.

It’s been going on for a while. In November, more than 1,100 Morrisons warehouse workers rejected a pay offer of 3% in favour of industrial action; in August, Sainsbury’s faced threats of disruption from workers at its logistics providers DHL; and in July drivers at GXO Logistics (formerly XPO Logistics) warned of a “beer drought” due to strike actions. While resolutions have in most cases been found, it is a burst of activity rocking an industry already struggling for workers. And it’s not unconnected.

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Haulage and logistics – like much of the food industry, in fact – has an employment problem. Too many people do not want to work in it and those that do are demanding more money.

For many months, HGV drivers were the focus of the labour shortages after 70,000 drivers left the industry during the pandemic. This has now eased after 30,000 drivers returned to the workforce since the summer, but warehouse staff appear to be taking their place as the primary cause of headaches.

The battle for workers is fierce. Wages for HGV drivers have soared by up to 40% in some cases, while pay rates in warehouses are up 20%-30%, according to Clare Bottle, CEO of the UK Warehouse Association. Supermarkets have been unable to keep up.

“You need to understand there’s often a reluctance to leave. Some colleagues have been working here for 20 years”

While some such as Tesco and M&S offered sign-on bonuses for HGV drivers of £1,000 and £2,000 respectively, and Waitrose has reportedly offered annual salaries of more than £50k on the warehouse side, unions highlight these only went to new workers and not existing employees.

That’s why Morrisons warehouse workers rejected a pay rise offer of 2%-3% last month and only narrowly avoided strike action after a fresh round of negotiations produced a pay rise of 5% backdated to early August.

At Tesco, workers are similarly asking for 5%, though the supermarket is so far proving unwilling to go above 4%. Andrew Woolfenden, Tesco’s UK distribution and fulfilment director, wrote to employees in November to insist 4% is a “fair and competitive deal above all inflation indices as of the pay anniversary date in July”.

“Four per cent is the highest award offered in distribution for 25 years…[and] in line for similar roles in distribution,” he said in a letter seen by The Grocer. In a separate letter in October, he said going beyond a 4% rise “would not be sustainable and would prevent us from continuing to run the business efficiently”.

A Tesco spokeswoman added the pay offer was recognition that “our distribution colleagues have worked tirelessly through the pandemic” and builds on a “highly competitive pay and rewards package”.

But while some Tesco workers are turning to strike action to try and tackle the disparity between supermarkets and other logistics roles, others are abandoning the company altogether. One Tesco employee told The Grocer that numerous colleagues have left for other logistics providers where they can earn up to £3 per hour more.

“But you need to understand there’s often a reluctance to leave,” they added. “Some colleagues have been working here for 20 years, so they’d rather face the battle head-on and improve our terms and conditions rather than leave for another company.”

It’s not just opportunism, either. As the cost of living soars – RPI, the inflation measure used by the unions, hit a 30-year high of 6% in October and is expected to climb further in the new year – “it’s coming to the point now where I have colleagues having to claim Universal Credit to make ends meet,” says the employee on condition of anonymity. “That’s unacceptable in the 21st century. Especially when you’re working for a multimillion-pound company.”

Where supermarkets have raised wages, it is typically through a ‘market rate supplement’, that gives an additional monthly stipend in regions of the UK where labour is particularly sparse, says Adrian Jones, Unite’s national officer for road transport and logistics.

He argues, however, that these payments are nothing but a short-term fix. “There’s every expectation they will be removed when supermarkets feel that workers aren’t needed any more. So that’s not a pay increase at all.

“Transport operators are understanding things need to change and are making significant improvements to pay and conditions,” he adds. “Unfortunately, the grocers don’t seem to be accepting what the real position is. They’re trying to perpetuate the status quo.”

Tesco’s Woolfenden, in his letter to employees, said the pay rise of 4% would be backdated to the review date of 1 July 2020, when the CPI rate of inflation was 2% and RPI was 3.8%.

Joe Clarke, Unite’s national officer for food and drink, suggests all food businesses have become too accustomed to low inflation rates and so are now struggling to adapt to a new epoch. “Part of the problem is that we’ve been accustomed to very low inflation for 10 or 15 years … so there’s a disconnect in relation to what most of the food sector companies are expecting to pay.”

Leverage

Workers are in a strong position right now. And they know it. An industry-wide labour shortage has left most businesses struggling to recruit workers, with the likes of Ocado offering a £500 joining bonus in an attempt to attract warehouse staff. Meanwhile, Tesco’s 871 seasonal vacancies last month was more than any other business in the UK, according to jobs site Adzuna. Tesco’s Woolfenden told a Cabinet Office meeting in September that the retailer was short 800 lorry drivers, as it had lost as many new drivers as it had hired.

The festive season also plays to workers’ advantage. It is of course no coincidence that strikes are planned for the weeks before Christmas to inflict maximum disruption, just as Amazon workers chose Black Friday to walk out last month. The Christmas season is too important for any business to miss out on, and Morrisons, DHL and others have clearly judged that the additional pay rises are worth it to prevent the disruption.

The current demand for workers may even pose a challenge to the unions themselves. “[The unions] are in competition with the outside world,” says Ian Wright, CEO of the Food and Drink Federation. “They have to show they can do a better job for their members than they could do themselves by walking across the road to Amazon.”

“The grocers don’t seem to be accepting what the real position is. They’re trying to perpetuate the status quo”

But the problem facing industry is not just vacancies. The productivity of many workforces has declined following the merry-go-round of workers since the summer as many left their existing employer in search of higher wages. While many of these were replaced, the influx of less experienced employees has impacted productivity and, in many cases, means more working hours are required to do the same job. Pay rises will therefore be less cost-efficient than in previous years.

The strikes are concerning, not just to Tesco and other food companies, but all members of the public relying on the supermarket in the coming weeks. It has led some commentators to suggest that the government should consider legislative change to minimise the disruption for workers crucial to the economy.

Existing ballot legislation means that HGV drivers and warehouse workers currently require a 50% turnout plus a simple majority of those who have cast a vote to go in favour of strike action, according to Ann Frances Cooney, a partner at Scottish law firm DWF, but the government could consider extending key workers’ rules that require a 50% turnout, plus 40% of all those entitled to vote, not just those who do.

Olivia Blake MP, who has spoken out on the food industry’s fire and rehire tactics, rejects the idea. “We already have some of the most restrictive trade union legislation around industrial action in Europe. I’m not sure it needs to be strengthened any more.”

The current strength of feeling means it would not necessarily make a difference anyway. Even under the tougher rules, Usdaw’s ballot of Tesco workers this week would still have passed. For now, it’s simply about whether Tesco’s stand leads to empty shelves.

Five strikes affecting the food industry

Morrisons

In November, over 1,100 workers at two Morrisons distribution centres threatened industrial action over the festive period. The majority of workers were initially offered a pay rise of 3%, though Unite claimed that the lowest-paid had been offered a rise of 2%. Morrisons said it could not afford further rises.

After the union began the balloting process, negotiations started again and a fresh deal of 5% for all workers was made and agreed by the workforce. The strike action, which was due to take place in mid-December, was subsequently called off.

DHL

More than 200 DHL drivers delivering for Sainsbury’s announced their intention to strike over an offer of a 1% pay rise in August. The strikes were called off after Unite negotiated a pay increase of 6.2%. In November, attention turned to the south west, where a further 140 DHL drivers delivering for Sainsbury’s threatened to walk out.

Unite said that drivers had been offered a pay rise of 3% over a period of 18 months. Workers were eventually handed a massive 14% pay rise. The south west has faced particular problems with labour shortages in recent months.

 

GXO Logistics

In August, more than 1,000 GXO Logistics (formerly XPO) drinks staff voted to strike. Workers were initially offered a pay rise of just 1.4%. The company delivers 40% of the country’s supply of beer, leading to fears that there could be a national shortage if the strikes went ahead.

Workers eventually settled the dispute after an improved offer of 4% was made. A separate dispute in October, involving over 350 workers, ended with pay rises of up to 10% for warehouse staff and 23% for drivers.

The new deal runs for 15 months until January 2023.

DVLA

In October, PCS members notified the DVLA of their intention to strike over Covid-related health & safety concerns. There were over 900 cases of Covid reported at the agency’s Swansea headquarters during the pandemic, where the DVLA had been processing licence renewals for HGV drivers.

There were concerns that if the strikes went ahead, then these renewals would have been delayed, causing a major headache for the supermarkets. However, the turnout in the ballot was only 40%, short of the 50% required for industrial action.

Carntyne Transport (Diageo)

In December, drivers at Glasgow-based Carntyne Transport began balloting for industrial action. Carntyne has initially refused to improve upon its £1.12 per hour pay increase for HGV drivers, to take hourly wages to £13.72. Unite is asking for an increase to £15 per hour and the dispute is ongoing. Forklift drivers were offered a rise of just 16p per hour by the logistics company.

The threat of industrial action has sparked fears of alcohol shortages in the run-up to Christmas. Carntyne is a leading provider of transport to the drinks industry.

The demand for workers across the industry may even pose a challenge to the unions themselves. “[The unions] are in competition with the outside world,” says Ian Wright, CEO of the FDF. “They have to show they can do a better job for their members than they could do themselves by walking across the road to Amazon.”